Funding for township and rural black entrepreneurs
A R120 billion fund that puts capital directly into the hands of black entrepreneurs in townships and the rural economy. It offers companies a simple alternative to the B-BBEE scorecard.
Four pillars
A credible leader
Appoint a credible leader to drive confidence in the fund. The market will judge the fund by the reputation of the person who runs it. An example is Sim Tshabalala, CEO of Standard Bank.
Mirror the PIC
Mirror the structure of the Public Investment Corporation. Place the fund under the DTIC. Amend the mandate so it funds black-owned venture capital funds.
Township and rural entrepreneurs
Mandate that all funding goes to township and rural entrepreneurs. This means businesses in townships and low-income communities, and in the rural economy — agriculture, tourism, conservation and rural enterprise. Keep the application process simple and quick.
R120 billion via a turnover levy
Raise R120 billion. Offer companies an alternative to the scorecard: a 3% levy on turnover, collected by SARS. In exchange, a Level 3 B-BBEE certificate. Zero complexity.
Seven benefits
Builds market confidence in the fund's competence and integrity
Widens the net of companies participating in B-BBEE
Raises meaningful sums
Simplifies business
Seeds a black-owned venture capital industry
Funds township and rural entrepreneurs
Spurs township and rural economic growth
What works, and what does not
B-BBEE has been a success. It has shifted ownership, built management diversity and contributed to economic growth. The policy must continue.
But two problems remain.
For all businesses
Compliance is complex. The scorecard creates administrative cost and distraction. It deters investment and slows new business formation.
For black-owned businesses
Access to affordable capital remains a critical constraint. The existing framework has not solved this.
BEE3 addresses both. A simple levy for those who choose it. A capable fund that places that capital in the hands of black entrepreneurs.
How the levy works
levy on gross revenue
collected by SARS
A 3% levy on gross revenue, collected by SARS. In return, a Level 3 B-BBEE certificate.
The levy is voluntary and offered as an alternative to the existing scorecard, not a replacement. Level 1 remains achievable by meeting employment equity targets in addition.
Level 3 B-BBEE certificate
Why revenue, and where R120 billion comes from
Why revenue, not profit
The levy is calculated on revenue. Revenue is hard to game. Profit can be reduced through accounting choices — expense classification, transfer pricing, depreciation policy. Revenue cannot be reduced in the same way. SARS already tracks it for VAT.
For a company with a 20% margin, the levy is modest:
Where R120 billion comes from
Formal business revenue in South Africa was about R12.7 trillion in 2022. JSE-listed companies accounted for around R4 trillion. Unlisted companies accounted for around R8.7 trillion.
Assume 15% of unlisted revenue is not B-BBEE compliant. That is R1.35 trillion. A 3% levy on that base yields about R40 billion a year. Over three years, R120 billion.
For comparison, current Enterprise and Supplier Development contributions from the same companies — calculated at 3% of NPAT, on an assumed 10% margin — total roughly R4 billion a year. The proposed levy raises about ten times that.
How the fund will be run
The fund sits under the DTIC and mirrors the Public Investment Corporation: an arms-length entity with professional management. Three principles guide its mandate.
Fund black entrepreneurs
Capital goes to black-owned businesses in townships and the rural economy. Not to government departments. Not as grants. To entrepreneurs.
Soft financing, not hand-outs
Interest-free loans and convertible notes. Capital is repaid and recycled into the next business. Terms more affordable than commercial funding, but capital that returns.
Deploy, do not hoard
Fund managers are penalised for holding cash. The point is to place capital with entrepreneurs who need it, not to protect it from risk.
The fund operates as a fund of funds. It deploys capital through a network of black-owned venture capital fund managers, who in turn invest in black entrepreneurs. The DTIC sets policy. Professional managers make the investment decisions. Reporting is public.
What this proposal does and does not do
Eligibility
The levy is available only to non-JSE-listed companies. JSE-listed entities continue to follow the existing B-BBEE scorecard.
Voluntary
The levy is voluntary. Companies choose between the existing scorecard and the levy. Neither is imposed.
Complement, not replacement
The proposal sits alongside existing B-BBEE legislation. It does not replace it.
The Kululeko submission to the DTIC
Dated 4 March 2026
The Kululeko Institute made a formal submission to the DTIC on the proposed Transformation Fund funding mechanism.
The core argument is simple. A levy on turnover is simpler, harder to game and raises more than a mechanism based on net profit after tax (NPAT). Profit can be reduced through accounting choices; turnover cannot, in the same way that VAT cannot.
A turnover levy is simpler, harder to game, and raises more than an NPAT-based mechanism.
The submission urges the DTIC to build the fund on the PIC template, appoint a credible leader, focus funding on black entrepreneurs in townships, and radically simplify compliance to widen the net of contributing companies.
Read the full submissionFrequently asked questions
Read the documents
Summary recommendations
Coming soon
Full submission to the DTIC
Coming soon
Transformation whitepaper
Coming soon